As the below chart shows, the exchange-traded fund of Renaissance Capital that tracks a basket of newly floated companies after their initial public offerings has delivered a more than respectable 36% return so far in 2017.
That surpasses the S&P 500 index’s 20% rise and is far better than last year when IPOs trailed behind an overall index fueled by the Trumpflation trade and the cheap funds being pumped into markets by central banks.
Next to Bitcoin, however, it might as well be flat. The cryptocurrency has risen 1700% in value in the same period.
That means US$1000 invested in the US IPO ETF at the beginning of this year was worth US$1360 on Tuesday. Preferring bitcoin would have left the average amateur market punter with US$17,545.
The cryptocurrency has faced harsh criticism for lack of transparency and Wall street is largely divided on how it wants to view the currency. Several banks and central bankers have warned against its meteoric rise in its value.
Chicago-based derivatives exchange Cboe Global Markets (CBOE.O) launched the futures late on Sunday, lending it some legitimacy and giving investors an exposure to the bitcoin market via a large, regulated exchange.
Goldman Sachs has been arguing for some months that the lack of liquidity and increased volatility of bitcoin mean in the long run it cannot rival gold as a convincing term store of value.
The market cap for bitcoin is still just US$275 billion versus the world’s US$8.3 trillion worth of gold.